When They’re Not Quite Bad Enough to Fire

Introduction:

This week, Paul Downs, Liz Picarazzi, and Jaci Russo discuss how they review employees and how they make the hard calls when someone is right on the cusp. The conversation starts with a couple of tricky situations that Paul is trying to think through and then progresses through several other issues. For example, do you use personality tests to avoid or resolve personality conflicts? Paul, Liz, and Jaci have very different takes on Myers-Briggs and the like. Do you make sure no one is ever surprised by a negative review? Do you keep mediocre performers even when you find someone who might be better? “I need to go shut the door before I say this,” Paul tells us. “I forgot to do it.” Plus: Jaci finds a use for ChatGPT. Liz may have found an alternative manufacturer in an unexpected country. And a business owner asks whether he should report a competing company that is endangering its customers and employees. Should he report them even though he believes he would face retaliation?

— Loren Feldman

Guests:

Paul Downs is CEO of Paul Downs Cabinetmakers.

Liz Picarazzi is CEO of Citibin.

Jaci Russo is CEO of BrandRusso.

Producer:

Jess Thoubboron is founder of Blank Word.

Full Episode Transcript:

Loren Feldman:
Welcome Paul, Jaci, and Liz. It’s great to have you here. I want to start today by talking, at Paul’s suggestion, about employee reviews. Maybe you could start, Paul, by telling us basically how your review process works.

Paul Downs:
Well, we don’t have a formal review where you sit down once a year and then go through a checklist or anything like that. I’ve done that in the past, and morphed into something that I’d seen other business owners do, a couple of them in my Vistage group, in particular, one manufacturer. And what he did was just made an attempt to sit down with every one of his employees on an individual basis, at least twice a year. And I started doing that in 2018, and in good years, I would be able to do that three times a year.

Now, your number of employees sort of makes that into a larger, larger commitment, and we’re up to 28 now. And for various reasons, I hadn’t sat down with everybody for almost a year. And so, I got my decks cleared, set up 20 meetings in two weeks—which is like four or five a day—and then just get people in my office and sit down and say, “Tell me what you’re thinking about.” And the purpose of the meeting is for me to kind of take the temperature of all of the employees and get a sense of: Are they experiencing challenges outside work that might affect how they’re doing their work, and what we can do to help, or if they have questions about things that they’ve been wondering about. It’s a good way to have a conversation.

And I’ve found that if you do it fairly often, it takes some of the pressure off to have it always be about raises. And also, it is a good steam valve, I guess would be a way to put it, where people get a chance to have their say. And then I can try to address things that come up. Now, if you leave it go for a year, I’ve found—and you’ve hired a bunch of people in the meantime—that it’s really like turning over a rock and a lot comes running out at you. So I’ve spent the last two-some weeks really just trying to listen to what people are saying and ask the new ones whether they’re happy, and some of my employees are—actually, you know what? We’re recording this. I need to go shut the door before I say this. I forgot to do it. Hang on. [Pause] Sorry about that.

In any group of people, there are going to be some who have personalities that aren’t entirely genial. And by the time you get to the size I’m at, you’ve got a couple of employees, probably, who most of the problems seem to center around. And we have a set of very explicit culture statements, our expectations of how people behave and how they should get along with each other. And I have two employees who I can point to aspects of the statement so that they’re not up to snuff. But they are producing work. So it’s not like, “Oh, I gotta get rid of these people, because they absolutely can’t do the work.” It’s more like they tend to drive their coworkers crazy.

And everybody else in the company is very patient. They know that I do not like to be someone who’s very punitive to employees, that I like to give people chances to reform. But I think in both of these cases, what I’m running into is, this is a basic aspect of their personality. And me asking them to change it may or may not work, but I kind of expect it won’t work because we’re running up against—well, I’ve got one employee who has a tendency to be very detail-oriented. And that’s good when she catches mistakes, but it drives everybody crazy when she harps on stuff that doesn’t really need to be paid attention to. And it’s like: Well, which one do you want? Do you want her to catch mistakes? Or do you want her to catch mistakes, plus a lot of other stuff? And I don’t know what the answer to that is.

So that’s where I’m at. And I’ve got to have conversations with the two, and I’m not much looking forward to that. But what I plan to do would be like, “Okay, here are our culture statements. Here are the exact statements that I think that you guys tend to violate. And here’s what I want you to do about it, which is stop doing the things that irritate your coworkers.” But that’s a very challenging conversation. And so that’s where I’m at. I haven’t had the two with these people, but I’m preparing for it—but also dreading it. Anybody got any thoughts?

Loren Feldman:
Let me ask you first, before we get thoughts, did you say you haven’t talked to them yet, in this round of reviews?

Paul Downs:
I’ve talked to one, had the regular review with him, and then he came back. And then he wanted a much longer review and had a bunch of questions but also brought up an incident on the shop floor that I think he was afraid I was going to hear about, where he was pretty much at fault for screwing up a bunch of work. And in the course of that conversation, he brought up the incident first and then moved on to other things. And by the end of it, I sort of wasn’t focusing on the incident. But then my shop manager came and said, “Did he tell you about this huge thing?” So, now I’m pretty steamed at him, because he kind of played me, too.

And the other one, I just kept putting off the review, because she’s one of two people performing a critical role, and the other guy’s on vacation right now. So if these things go wrong, one of my self-rules for any kind of difficult conversation is: You have to be ready for someone to storm out and quit, and what are you going to do then? Because I’ve had that happen to me. And so I like to make sure that if it happens, that we’ve got some way to perform the functions these people were doing.

Loren Feldman:
So in the one situation that you described, it’s somebody who’s doing something repeatedly that’s bothering people. It’s the way she operates. And the other, you’ve told us about one incident. Are you concerned that that incident is going to be an ongoing problem or an isolated situation?

Paul Downs:
Oh, it’s definitely an ongoing problem, and I just haven’t focused on it, for the same reason I wasn’t doing the individual meetings. I’ve been trying to fill in and train a new salesperson and a lot of other things have been going on. So I just have not focused on this person’s performance, but it’s pretty clear that it’s a bigger problem than we wish. And this is someone who, when I first hired him, we had him in one role out on the shop floor, and he did it really well. He actually brought our game up considerably in doing this one task. And then he wanted to be moved into the office to become an engineer, which is what he went to school for. And we did that. And he’s just not nearly as good at it, which is weird, but there you go.

And so the other engineers are starting to really lose patience with this, because, okay, it’s a complicated job, but there should be improvement in your quality. And there just hasn’t been—plus a desire to kind of minimize the impact of repeated errors, because every one is a grenade that gets thrown downstream, and everybody else has to deal with it. You know, we thought the parts were going to be good, except they’re not, and now everybody’s got to deal with it. And that one’s simpler, in a way, because I have enough people available to back up for him. And I haven’t had much trouble hiring engineers as engineers. It’s a little more tricky when we try to move someone from the shop floor into engineering. That lowers the success rate.

But the other person, yeah, it’s an inherent part of her personality, and I just don’t know. And she’s got some very positive parts of her personality, too. She is a warm-hearted person and cares about everybody and tries very hard to do a good job. It’s just that the way I’ve been thinking about it is: If you go fish for tuna, you’re out there in the ocean with your boat, and you throw a huge net in the water. And if you do it right, you catch tuna. But inevitably, you catch a lot of other stuff, too. So she’s the one who catches tuna, but there’s always something else that we have to deal with. And I don’t know whether talking to someone about that kind of thing is going to work, in terms of fixing it.

Loren Feldman:
Do you have the same concern with the other person that that person just is not going to be able to up his game to meet your standards?

Paul Downs:
I’m pretty sure he won’t. But I feel like I have to give him a fair warning, too.

Loren Feldman:
Got it. All right, Jaci, Liz, any thoughts?

Jaci Russo:
Wow. Paul, that is so much to unpack, and I have such empathy because I think we all face those challenges. You know, employees come into the reviews expecting raises, shocked that there is constructive criticism or feedback, acting surprised that no one’s told them that before. And I think it’s a tight line we walk. I’m surrounded on a regular basis with HR people, and I do trainings with some HR people through training our advisors, and I hear them talk over and over again, and so it’s kind of started to sink into me that, first of all, no one should ever be shocked when they get to a review. They should have already received small, bite-sized pieces of feedback along the way, so that the review is a chance to look back and say, “Okay, six months ago, we talked about this. And four months ago, we talked about that. And two months ago, we talked about that with documentation. And so, how’s that evolution coming?” So that’s a big part of it. Is that something that you all do? I know, you don’t do the big review, but do you do smaller feedback loops at any point?

Paul Downs:
Well, yeah, I mean, there’s constant feedback. We talk to each other all the time. And when somebody makes a mistake in manufacturing, it’s pretty obvious. You’ve got something that’s messed up just sitting right in front of you. And part of the complexity is that we do very complex things. It’s different every time, and so there is an error rate that’s probably never gonna get to zero. And then you’ve got good people who occasionally make bad mistakes. And then you’ve got a situation where somebody is making mistakes all the time. And it just does not seem like it’s going to fix itself. Plus, then, despite clear guidance in the way we promulgate our culture, is not really paying much attention to the effect that this continual session of errors has, that you just keep throwing crap downstream. And it’s very discouraging for everybody down there.

But that said, your point that no one should ever be surprised in a review: Well, I disagree with that, because people are surprised. I mean, it’s not that we should intend to surprise them, but there are people who just never hear what you’re saying to them, until they’re ushered out the door. And I’ve seen that. But we try to have a pretty open environment about just the quality of the work and records about errors.

I’ve tried for a long time to have kind of a no-blame culture. But I think that shame is actually an incredibly powerful motivator, and that, if you can point out to people that when they screw up, they’re actually letting all their coworkers down—and not try to sugarcoat that too much—I think that that is actually the best way to deal with it. Because it’s actually the most human way to deal with it. Whatever up-to-the-minute HR practices may say, shame has been part of the toolkit for human interaction forever. And so, trying to avoid being the person who screws up in front of everybody else, I think, is a pretty powerful motivator. But there are people who are just absolutely immune to that, like they never see anything as their fault. And so that’s kind of where we’re at here.

Liz Picarazzi:
Yep. Do you ever do any sort of personality assessments like Myers-Briggs or Disc?

Paul Downs:
I’ve done them. I have my issues with them. I can’t remember the company, but through Vistage, once, we had access to a full suite of these things. And I had all my employees take the test and then check to see whether the results of the tests actually jived with my experience of the people’s ability to do their job. And I found very little correlation.

So then I got in touch with the company. And this is a company that would give your people a test and not only say, in Disc, “They’ve got these characteristics,” but then would say, “And here’s how you should manage them.” Or whether you should fire somebody or not, or whether you should hire somebody or not. In other words, going beyond just, “This is what we think this person is,” to, “Here’s what you should do.”

Which is where I got off the bus, because I was like: Okay, so I took your test. I have people who, according to your lights, can’t be performing the job they’re actually doing a pretty good job at. And if, again, according to your lights, I had interviewed this person, given them your test, and then not hired them, both me and them would have been deprived of the opportunity to be a good worker here. So what’s the feedback mechanism? How would I report to you that, “Okay, I got the test. Here’s the results. But my experience has been this person can do it. Do you have any way to report back and say, ‘Maybe your assessment should be broadened to possibly incorporate new information’?” And I got complete, stunned silence from them and never any reply.

What they had apparently built their algorithms on was a series of, I don’t know, psychological studies from the ’60s or whatever. You know, like, whatever theory they pulled out of their ass, and they coded it and then off you go. I really object to using those to assess people and make serious life decisions for them on the basis of some robotic algorithm. Now, I know exactly why it’s attractive to a boss to use those systems, because you can just wipe your hands. You know, it’s like, “Well, shrug. The robot says you’re no good. Get out of here.” And for hiring, in particular, and just even ongoing evaluation of employees, it’s nice to have some frame of reference. And if you don’t have it, that’s a life raft. It saves time. It’s simple. And the person you send away, it’s not your problem anymore. So I get the attraction. But I hate those things, personally.

Loren Feldman:
That was a pretty clear answer. Liz, have you had success with those kinds of tests?

Liz Picarazzi:
Yeah, so I have to admit, I haven’t done it with my team now. But in previous jobs, including at American Express, when they did those tests, it wasn’t like they just did the test, and then you talked to your boss, the leader, about it. It was that there was a facilitated conversation within a team, and with a situation or two where the leader saw that the people’s personality types were expressing themselves, and then there could be a conversation about why this person may have done this, and how there was value in that, or how it rubbed another person the wrong way.

I actually thought it was pretty useful. But that depended on their test results actually corresponding to who they really were at work. So what I’m hearing Paul say is that the output from those tests didn’t really label his employees the way that you thought it might. So to have a facilitated conversation like that—and Paul, it wouldn’t be with you. It probably would be with someone coming in from the outside, from one of these things. You know, maybe you just haven’t found the correct test. I think that they can be really useful. But it is more situational, where you take a couple of situations that didn’t go well, where you see that those personality types were at play, and then bring people around to see what may have gone on.

Paul Downs:
But like anything, it’s information you didn’t have, and there’s probably ways to make it work. My big problem was that you don’t know what’s going on inside that box. You know, I’m not a big enough organization to bring in 10 million trainers or outside people. I’m not American Express. I’m never going to do things the American Express way. And I think that most of the people who are listening to this are in a different space, with regards to the luxury of time and resources to do it that way. Most of us are just running our own company.

And with 28 people, I don’t really have space for a full time HR person. So I end up doing it myself. And maybe I’m good at it, maybe I’m bad at it. A lot of my employees seem to be extremely happy. At least that’s what they’ve told me, and they seem to act like it. And I got feedback about these two people. One of the tests really is: If this person came in and quit tomorrow, how would you feel? And how would the other ones feel? And I know for a fact that with these two, that if they left tomorrow, nobody else would be particularly upset about it—other than, now there’s work that somebody needs to pick up.

Loren Feldman:
Liz, clearly Paul is not going to choose this as a solution to his problem, but I’m curious: Were you thinking that the tests might be helpful, in terms of who he hires, and maybe he wouldn’t have hired these two people? Or were you thinking that it might be useful in terms of finding a way to solve a problem with existing employees?

Liz Picarazzi:
I think actually both. But with the one about having the facilitated conversation, I would challenge Paul that it doesn’t necessarily need to be an expensive or time-consuming endeavor for a small business. Because you take the test, it’s administered, and then you and the facilitator could talk about: What are some scenarios that we could go through, where these are playing out?

And you know, I, too, don’t bring in consultants for stuff like that. I don’t need it right now. But I think that it’s good if people understand the difference, like, let’s say, with Myers-Briggs, with being an extrovert or being an introvert, or being perceiving, or judging, or sensing, or feeling. Some of the materials on this will show you: What are examples of people operating in this way? So, when I was in corporate, I knew I’m an ENFP on Myers-Briggs. I’ve been tested four times, and I always come out that way.

Loren Feldman:
What does that mean?

Liz Picarazzi:
Extrovert, intuitive, feeling, and perceiving. And some of those things don’t go very well in a corporate setting. And so some of the people who I felt were very judging and came out as judging in the test, I was better able to understand that those people tend to be very rules-oriented and that there needs to be some of those people on the team. You know, I perceive. I don’t judge, for the most part, and it actually made me feel a little bit better about some of my teammates and my leader at the time. Because I understood a little bit more how they ticked.

You know, it wasn’t some week-long session. It was literally just one day where a facilitator was brought in. We had the test results, and they actually had some handouts that were done. But it showed, in real life, what are some situations with an example of someone being judging versus perceiving, or extroverted-introverted? That’s just with Myers-Briggs, but I know Disc and others have something similar. So, I think it can be useful in both scenarios.

Jaci Russo:
I’ll jump in with how we use it. We’ve looked at Disc and Myers-Briggs and all of it, and we kind of gravitated towards Enneagram. And we have made decisions based on it once we started, because we brought in a professional development trainer, Melissa Bowen with the Authenticity Center, who’s been working with us for a couple of years. And she gave it to us as part of an exercise. It was about being your authentic self and being better leaders and development and all that kind of stuff. And so in doing that testing, we were able to find some patterns in our 20-something people. And some of the more challenging relationships, when you looked at the numbers laid out, it was like, “Oh, yeah, that’s why they don’t get along. They’re both fours. Totally get that.”

And so now we use it when people apply, and they get into the final round of interviews. Right before we hire them, we have them take the test. I’m not saying we wouldn’t hire a four. I’m using the four as an example. I’m married to a four, so I’m not saying that. But we do find that it helps—or at least it helps me—ask better questions in the interview, better identify challenges they might be bringing into the relationship, and it helps me better understand how to coach them based on who they are, not who I am.

Because I think that it’s not, “Treat people the way you want to be treated.” It’s, “Treat them the way they want to be treated.” And so I think I’m a better leader because I have a better understanding of who they are and what they need and want. It’s just like reading the five personalities in the workplace. You know, it’s that love language science of: The more you know about them, the better you can work with them.

Paul Downs:
I don’t disagree with that. I think that there’s use there, but what I’ve preferred to do in my company is make clear what the standards of performance are. So here’s the standards. Here’s what you need to do. You know, if you can do it, you can do it. If you can’t do it, you can’t do it. But rather than assume that certain people can do certain things, we just tell them what needs to be done. And then, there’s the standard.

The other thing about these tests is that it’s not at all clear to me how well they work for people who come from very different backgrounds. I took the Disc test, and I’ve taken various ones myself. And all the ones that I took required pretty good knowledge of standard English. Okay, so if you’re giving it to somebody who’s a blue-collar worker from Tigray, in Ethiopia, and comes from a completely different place—weak English skills, completely different culture—how much is that test going to tell you? Those people writing those tests, are they somehow taking into account all that? I kind of doubt it.

So, the assumptions that are built into any test are going to guide the results. And if you’ve got nothing else to go with, great. Use the test. But I’ve got a different way of going about it, which is, when we hire, we just give people skills tests. And then we make it clear, like, “Here’s the rules of the game. Here’s our company culture. Here’s how we think about our work. This is what you need to do.” If you can do it, you’re in. I don’t care what kind of personality you have.

One of the rules is, you have to get along with your co-workers. And again, details left to situational, but you have to get along with your co-workers. Or your effort should never subtract from the total efforts going into the job. If we’re going backwards every time because of something you’re doing, that’s a problem. But it doesn’t try to guess who the person is. It just says, “Here’s what you need to do.” And that’s my approach.

Loren Feldman:
Paul, let me ask you this: I think you’ve made clear that you need to have these conversations. You want to give them a chance. You have some doubts about whether they can adjust, but you’re going to give them a chance to adjust. I’m sure you’re thinking a little bit about contingencies if they do not adjust. Can you talk about those contingencies? Is it over? Or is there a possibility that one could go back to the job that he did well? Are there just different roles they might play?

Paul Downs:
Well, I actually just discharged someone two weeks ago. There was nothing wrong with this person other than they could not do the job. But one of the policies in our handbook is: You need to be able to produce work at the quality level that we demand. And if you consistently can’t do it, your job’s in jeopardy. And I have gone back and forth with this young woman for years about various things that she just didn’t want to do. And she wasn’t particularly good at interacting with the rest of the team. She was doing a task that was mostly content production. It didn’t require her to be on the shop floor or anything. But then a person showed up who was going to be able to do that job a lot better, and a bunch of other things as well. And I’m like, “You know, why should I put up with a mediocre performer when I’ve got a better one at hand?” So I let her go.

And with the two upcoming [people], one, I would not worry so much about letting go, because we already have two other people doing that job. And I discussed with both of them, “Hey, if I have a tough conversation with this guy, and he stalks out of here, are you gonna be able to pick up the slack?” And they’re like, “Yes”—yes with a big smile on their face. [Laughter] So I mean, it tells you what you need to know, right? Which is, if the rest of them are going to be delighted when somebody’s gone, that person usually needs to be gone.

Loren Feldman:
Jaci or Liz, any thoughts on that?

Jaci Russo:
I mean, that sums it up right there. I was at an HR luncheon yesterday, and the facilitator, Dr. Michelle Robertson, was walking through the nine boxes. And it’s one of those really great charts where you see, you know, your top right corner, everything’s golden. They’re high performing, high energy, great asset. Your bottom left corner, they need to be gone. They are a drain. They’re toxic. They’re low performing.

And so I think sometimes it’s about figuring out where every employee is on that spectrum. And sometimes I think we do tolerate some less great behavior because they’re so skilled and awesome at their job. And then other times we realize they’ve just crossed the line. It’s not worth tolerating some of the bad behavior anymore for a skill that can be replaced by somebody else. And I think for each of us, one of those steps on the entrepreneurial journey is to assess the talents of our team and where they fit in their roles.

Paul Downs:
Now, that said, it’s one of the most unpleasant things you could possibly do, which is to just let someone go.

Jaci Russo:
Fact. I dread it.

Paul Downs:
Yeah, that is not a fun conversation. And I was trying to prepare myself by writing down a whole outline of what the problem is and what the solution is. And in this case, since I was discharging someone who was just mediocre, I put together a whole package, like, “Here’s what we’re gonna do. And you can file for unemployment and blah, blah, blah.” So it wasn’t quite as bad as it could be. But still…

And I actually got fired from something for the first time in my whole life a couple of months ago. I was on the board of a nonprofit, and my usual, somewhat abrasive style did not go over well with one of the founders, and they threw me off. And so I had gotten voted out. I got ushered out. It sucked. And I now have even more sympathy for people who are discharged from something, because I didn’t particularly want to be fired. But I’ve gotten to age 62 without ever being fired from anything. And that’s kind of remarkable.

Liz Picarazzi:
Congrats. [Laughter]

Paul Downs:
Thank you.

Jaci Russo:
You’re a late bloomer.

Paul Downs:
Yeah. But it was being fired for basically who I am, and it’s not an easy thing to hear.

Loren Feldman:
Although it didn’t cost you your way of making a living.

Paul Downs:
No, it didn’t. It cost them a lot of money, because I had been a major supporter. But whatever. They’ve made the decision. So, it’s off we go.

Loren Feldman:
Paul, it occurs to me, I think we talked through another situation of yours, either late last year or early this year, where you had an employee who had previously performed really well, but was having some problems and wasn’t performing. And you were nervous about it, because you felt as though if it didn’t work out, and the person had to leave, you would have to step in and take on that role. But you were hopeful that the behavior might change. How did that one work out?

Paul Downs:
I gave him the stern talk, and he quit about three weeks later. And I did end up stepping in and taking over his role. But through sheer luck, we had someone pop out of the blue, who was a pretty good fit for the role. So we hired her, and I’ve been training her, and she’s made tremendous progress. And that’s what actually freed me up to do this round of reviews, because I was acting as salesperson from about the 10th of January until the beginning of July. He just resigned, went off to start another thing, and I was like, “Fantastic. Problem solved.”

And we had another employee on the shop floor who was a really nice guy, lovely guy, got along with everybody. But he had sort of ceilinged out in his skills acquisition. And my shop manager and I were discussing this, and my shop manager said, “I think we need to get rid of him.” I was like, “Yeah, but he’s older. I don’t want to put him on the street and have him just, you know, destroy his life. And I just don’t feel like it.” Well, he just walked into my office and gave notice two days ago, and had found another job that paid more money installing closets. And, like, great! Problem solved. So sometimes these things solve themselves, if you’re lucky. The people just get a sense or whatever. They just move on. But sometimes they don’t, and you gotta do something.

Loren Feldman:
It sounds like you’re having a certain amount of turnover. Is this normal? Or is there a reason, something else going on, that’s creating this?

Paul Downs:
It’s not an unusual amount of turnover. I mean, I didn’t mention that I’ve also hired—let’s see, one, two, three, four, five—in the last six months. And they’re all in their twenties, and they’re all doing great. So, that’s the flipside, is that we’ve been attracting workers who I’m very happy to have, and who are happy to be here. And I feel ever more committed to making sure that the team doesn’t have any bad apples in it, because I’ve got a great team.

There are a lot of people here who work really hard, pay attention to what’s going on. And I don’t want them to be frustrated because I will not take action and get rid of an underperforming coworker. And I think that that’s a classic trap that bosses fall into. They let these things go on way too long. And it starts to discourage the other ones, and you really don’t want that.

Liz Picarazzi:
It’s toxic. You don’t want to let that one person poison the well.

Paul Downs:
Right, but even someone who’s not overtly toxic can poison the well if their work is not good. Because then it’s like, “Well, why am I killing myself to do great work when the boss is tolerating mediocre work?” And that’s a good question. I don’t know why any worker should put up with that from leadership, particularly in small companies.

Loren Feldman:
Let’s move on. I want to run another interesting situation by you guys. This is another one of those things that I found on the small business subreddit. It was headlined, “Should I blow the whistle on my competitor?” Let me read it to you quickly:

“I own and operate a small business within the U.S. in a state and federally regulated field of work. This work requires both national accreditation and state licensing. Though they claim to be licensed, my major competitor—and likely largest producer in our local market—has operated without accreditation or licensing for many years. According to the law, each day they are in operation constitutes a potential criminal charge and fines. Moreover, their actions have the potential to cause an imminent threat to the health and safety of their customers and employees. I want this competitor to be held to the same standards and regulations as the rest of our industry. I have attempted to inform the relevant authorities anonymously. However, neither our state agency nor the national accrediting agency will accept an anonymous report. I have every reason to believe that this competitor will retaliate against me personally, professionally, and even physically, if I were to make a formal complaint. Small business owners, what would you do in my position?”

Anybody?

Liz Picarazzi:
So, my gut feeling on this is that he should drop it. And the only thing I would kind of back that out is, say, if it is truly something where it is unsafe, that would kind of make me maybe rethink my position. But the reason I feel like it should be dropped is that having a competitor or rival that consumes your mind and your time is really draining. I had a situation a couple of years ago where a new competitor had copied a lot of my products, an enormous part of my website, word for word, and was copying the captions on my Instagram, word for word.

I got in a legal thing with him that I just kind of got in the early stages of, with cease and desist. This may just be me, but I ruminated about the situation so much, and it was really draining. And it took away my focus on growing the business, my employees, my product, all the things that bring me joy. And I needed to kind of get it out of my system. And I ended up having a few victories out of it, but this fellow actually called one of my government clients and said, “Why is Citibin getting so much press? Like, why are you favoring Citibin?” And I found that out, and that made me even more pissed off. That was really what drove my kind of obsession with that situation.

And so my answer to this would be: Don’t try to do anything that is going to put you or your business in danger, certainly if it was a physical situation. And that he or she should look at: How much of my mind space is taken up by the situation? Because if it’s a huge amount, that’s not good. And then the other thing is, focus on being a better competitor. You know, focus on having a better product or service so the customer chooses you over that other person. I know that’s probably easier said than done. But from my perspective, the toll that a competitive rivalry like that can take, it’s not worth it. It’s not worth the time, effort, or money.

Loren Feldman:
Liz, what happened to that competitor that copied you? Did they continue to grow and do well?

Liz Picarazzi:
No, they didn’t. They have a very small business, really small compared to me. I mean, if I had to put a number on it, maybe 2 percent? But I had to let go of my frustration with the situation. At the time, I didn’t know how well they would do, and so that was a little scary, and it felt quite threatening. And also my righteousness came out blazing.

I can be a very righteous person. How dare someone copy my product? Bad enough. But as someone who’s a writer and spends a lot of time on my marketing and my copy, how dare this person copy my writing? Because that’s something that, side by side, you can compare and see these are the same words. With the product, it’s harder to do. My patent is probably not strong enough, and that’s what came out. But I decided not to pursue it further legally, because I realized that he couldn’t compete with me. But when it first happened, I didn’t know that. And I just knew that it took a big toll, and I’m glad I’m past it.

Jaci Russo:
I had a similar situation, too. I guess we all do at some point. I would not consider them a competitor, because I don’t want to elevate them to a certain level. And this gave them a unique competitive advantage in the market, because they illegally classified all of their employees who went to their office every day from eight to five and had no other jobs as independent contractors. And therefore, they didn’t have to pay payroll taxes or benefits. And so it definitely created an imbalance in their charging model, their pricing model.

And there were other companies in our space who were aware of it, and there was discussion about: Should we do this? Should we do that? And I saw both sides. I could see the need for justice and the desire to turn them in. And at the same time, it kind of felt like karma was gonna win out in the end. You know, I think bad business people tend to reap what they sow. And if you just kind of let it play out, it tends to work out the way it’s supposed to.

Loren Feldman:
Is that what happened there?

Jaci Russo:
Yes.

Liz Picarazzi:
And the integrity that they show in the situation with you, if it’s bad integrity, that’s going to show up with their customers as well. And that is going to make them self-destruct.

Loren Feldman:
Paul, what do you think?

Paul Downs:
I agree with everything Liz said. It’s very easy for you to let competitors or any number of distractions into your head as a business owner. And there’s really only one thing to do: Make the best business you can. Provide the best product. And that’s how you go forward. In this particular situation, though, I do think that people who don’t meet the minimum legal standards for employing people, it is hard to compete with that in some fields. We don’t know what the field is here. And we don’t know whether the person has the correct information. We don’t know a lot. We don’t know to what extent, when they say health and safety, what are we actually talking about here?

So, I would take the question maybe with some grain of salt, but Liz’s observation that once these people are in your head, I mean, they destroy everything around them because of their crappy way of doing things. And now you’re in the mix. And so you can get sucked in, and there is little to do. I think that in a world where there are many, many ways for people to leave reviews of businesses, and many, many ways for a business owner to highlight their own accomplishments, people will catch up with the bad actors faster than they used to.

So, I’m actually kind of curious about what kind of product or market can go on forever and be the dominant player, and nobody’s ever left a review or nobody’s ever had a bad experience. You know, maybe the questioner just wishes this person would disappear. But I’ve never heard of a situation where there was no way to actually register a complaint. I would say that if you’re the average business owner, and somebody does what happened to Liz—and that’s happened to me on many occasions, too, with people stealing my images or whatever—you just have to get beyond that. Like, once they pick up the phone, they’re going to know the difference. So if you’ve got limited headspace for all the different varieties of trouble coming at you, don’t spend it on that.

Loren Feldman:
Interesting. I think we have time for a couple of quick updates. Jaci, you’ve told us in the past about your pretty ambitious effort to review all of your processes to see if there’s anything you can do to improve them, especially using AI. I’m curious, anything new?

Jaci Russo:
We have, actually, I think, had pretty good success with it. It’s not replacing people, by any means, but we’ve been able to use it in part of our Razor Branding process. That’s the strategic brand-planning we do. It’s been very helpful with research, with developing personas. It is a brainstorming partner.

We would never let any AI write our copy for us, and we have human copywriters, a team of them, that are very good at their jobs. They are still far more creative and clever than AI could be. But you know, I’ll keep you posted. But for now, their jobs are all safe, and they’re very talented. But it has, I think, enabled us to do social media faster. You know, developing ideas for captions. We still humanize it before it’s ever seen by anyone, but that brainstorming partner is great.

From a graphics standpoint, I was on a consulting call with a company just the other day. And they were telling me that they had heard the advice, and they realized they needed to change the name. And I would love to get into it because it’s a disaster. And so they had come up with a new name and a new logo. And unlike the advice that I gave them, in terms of hiring an expert—it didn’t have to be us, but hire an expert for that—they were continuing to do some things on their own.

And so we’re on Zoom, and he shows me the ideas that they had for the names and the designs. Worse than the original, if that’s even possible. Like, so much worse than the original. And I said, “You know, this is a hospitality-service-based business, and you’re using blood-red, all caps. You’re yelling at people. You’re practically threatening people with your logo. You’re not encouraging them to come in. You’re running them off.”

And so, on the call, while we were chatting in the matter of three or four minutes, one of the other team members quickly jumped on ChatGPT and just said, “Listen, this is how far you are from where you should be,” and just showed them an AI mock-up—obviously not right, not trademarkable—just to show them the difference between something that looks clean and polished and professional and finished and something that looked like what he was doing in Paint, I kid you not. Microsoft Paint is what he was using to create this extraordinary accomplishment of ugliness. And I finally saw the light go off in his eyes.

Now, please know, I had shown close to hundreds of examples of companies that do it right, companies that do it wrong, how families of logos should work together and not work against each other, explained house of brands versus branded house. But for whatever reason, once he was shown his idea in this quick kind of sketch way, he got it. And now he’s on board with doing it the right way. And I thought, “Oh, that’s what it took? Okay, got it.” And so that, to me, is the tool. It’s: How do we use it to save a little time here to visualize what we’re talking about there? You know, it’s still six-fingered people. It’s not final, by any means.

But it’s been great. And we’ve gotten it enough that I actually have been brought in by SEBD statewide to teach some AI classes. And really, it’s a whole technology series online, of how to use technology to turbocharge your small business, how to incorporate it into lots of different small areas where it can help you do your job better. Because so many marketing people are self taught that they’ve missed a lot of the foundational things, and they don’t know what they don’t know.

Loren Feldman:
What do you think happened with that client? That ChatGPT logo, why was it able to convince him of something that you weren’t able to convince him of?

Jaci Russo:
I think sometimes, people don’t have very good taste. Sometimes they know they don’t have good taste. I know that I can’t look at paint colors, or fabrics, or furniture or carpet and know how to pull a room together. That is not my skill-set.

So I think sometimes, like me, people just don’t have a vision or a talent in that area. I think when it comes to logo design, if I show them a series of really smart, well done, big companies, it’s automatically discounted in some ways because it’s big companies: “I don’t have Nike money. I don’t have FedEx money. That’s unattainable for me. And they don’t have the problems I have.” And I’m thinking, “They all started small, just like you.” You know, they got there the right way. And so part of it is vision. Part of it is taste. Part of it is understanding the options. And so by taking their name—or the name they were wanting to use—and putting that into something, now it’s like, “Oh, I see.” For whatever reason, the bell went off, the light went off. They got it.

Loren Feldman:
One other update, real quick: Liz, we’ve been talking to you about your ongoing efforts to deal with the threat of increased tariffs on the products you make in China. You told us about visiting a factory in Vietnam, and your plan to have them do an order for you to assess. Where do you stand? Anything new?

Liz Picarazzi:
So the big update, and this is interesting: Two weeks ago, on Thursday, I had a meeting with a Canadian factory, and I thought, “Oh, I’m just gonna take this call. Let’s see how it goes.” And it actually is very promising. And that makes me feel a lot better, because if Trump wins—unless the relationship with Canada changes—Canada would be a safe place for me. Now, that’s not to say that I would yank everything out of China, Vietnam. It would mean that I would diversify my supply chain and have Canada be in play.

I’ve been focusing not just on the price and the price of the tariffs, but also on the cost of my supply chain. So, the cost of uncertainty is very high. The cost of worry is high. The cost of containers is incredibly volatile. It’s gone up in recent months. As we know, the tariffs are going up. But let’s say something goes wrong, and I need to get some new parts from China. You know, I often have to airship those over, and that costs a lot. So the idea of having my supply made and housed in Canada, a nine-hour truck ride away… I’ll just say the word “tantalizing.” I’m like, “Please!” So I’m getting the quote, and I’m having a meeting with them. And if that avenue can work, I’m going to feel a lot better about things.

Loren Feldman:
When will you know more about the situation in Canada?

Liz Picarazzi:
At two o’clock today, in less than an hour.

Loren Feldman:
Wow.

Liz Picarazzi:
I got the quote while we were taping, and I’m having a meeting with them in 59 minutes—not that I’m too looking forward to it! [Laughter]

Paul Downs:
Did they quote in American dollars or Canadian dollars?

Liz Picarazzi:
I actually don’t even know that. Yeah, that’s gonna be something after we get off the phone that I’m going to look at.

Paul Downs:
You should figure that out, because there’s about a 30-percent difference.

Liz Picarazzi:
Yeah, it’s actually a little higher than that. So if they’re Canadian dollars, the price they gave would actually be very attractive with the number that I saw.

Loren Feldman:
Well, we will be eager to hear more about that when you can tell us. But for now, my thanks to Paul Downs, Liz Picarazzi, and Jaci Russo—and to our sponsor, the Great Game of Business, which helps businesses use an open-book management system to build healthier companies. You can learn more at greatgame.com. Thanks, everybody.